Bwin.party suffers loss in opening quarter

The digital entertainment company bwin.party has recently released its financial performance in the opening quarter of 2015, which reflected a revenue amounting to €155.3 million. This is a 6% year-on-year decrease compared to the €165.7 million posted in the same quarter last year.

Bwin.party continues to struggle performance wise as observed in the opening quarter. The group’s performance has been impacted by unfavorable European football results and a continuous decline in the performances of its online casino and poker product areas.

Despite this, the report highlighted that nationally regulated and taxed market represented 62% of the total revenue compared to last year’s 56%, while mobile/touch represented 30% the gross gaming revenue during the period compared to 17% in 2014.

Formed in March 2011 from the merger of bwin Interactive Entertainment AG and PartyGaming Plc, bwin.party serves millions of players worldwide in multiple languages and broad range of currencies. The digital entertainment company has four product areas – online sports betting, poker, casino and bingo – which are marketed under some of the world’s leading gaming brands such as bwin, partypoker, partycasino and FoxyBingo.

The company management also stated that its cost saving of €15 million per annum are on-track for this year with the completion of bwin.party’s technology integration, the sale of its non-core businesses and a more efficient, product-led marketing spend.

With its mobile drive expansion strategies, the operator increased its sports betting revenues by 9% to €738 million. However, unfavorable results impacted the gross win margin down to 8.7%, compared to last year’s 10.3% which is reflected on sports betting revenues amounting of €58 million. Mobile represented 41% of the total sports betting gross gaming revenue in the first quarter.

Elsewhere, the company’s casino vertical saw an increase in amounts wagered by 1% amounting to €1.723 billion but it suffered an 11% decline in net revenues, amounting to €46.8 million from last year’s 52.6 million.
Bwin.party’s poker vertical suffers the most with a 31% decline in net revenues amounting to €16.8 million and a significant drop in player activity from 41,000 down to 28,900. According to bwin.party management, the performance of the vertical during the quarter confirms the challenging environment in European poker.

Despite the declines in revenue from majority of its product verticals, all hope is not lost for the company as bingo remains strong and has observed growth during the quarter. The launch of the new marketing campaign in the UK increased its net revenue by 1% to €13.8 million. Bwin.party also highlighted an increase in new player sign-ups by 24% year-on-year particularly through its mobile channel.

Norbert Teufelberger, Chief Executive Officer of bwin.party digital entertainment plc, says that despite the slightly lower revenue and additional taxes, continued management of the company’s cost and further operational efficiencies have meant that Group Clean EBITDA margins for the first quarter are ahead of the Board’s expectation and also ahead of last year.

Teufelberger adds that bwin.party is making good progress in respect of their non-core asset disposals and they remain on track to meet the €30 to €50 million target for sale proceeds this year.

With the announcement of its 2014 financial performance last March, bwin.party Chairman Philip Yea told the press that the board of directors was already in advanced stages of discussions with several parties who were interested in acquiring the digital entertainment firm. It was only recently confirmed that gaming companies 888 Holdings and the GVC Holdings-Amaya Gaming tandem have already submitted their proposals for the possible acquisition. The acquisition proposal is estimated around €1.5 billion.